When any business owner becomes involved in a Chapter 11 bankruptcy, as either a debtor or a creditor, he or she should consult an attorney with experience in that field. Each status comes with both rights and responsibilities under the law.

For example, if a business owner continues to operate his or her company as a debtor in possession after receiving protection under Chapter 11, he or she remains in control of the business’ assets, but is obligated to administer them as a trustee working in the best interests of creditors. A business owner in this situation may not be able to pursue a course of action that deviates from the normal course of business without obtaining court authorization.

Another example involves the right of creditors in a Chapter 11 situation to access the written disclosure statement that a debtor typically submits to the court within 60 days of filing for Chapter 11 protection. The statement must provide information about reorganization plans sufficient to enable a creditor to make informed decisions going forward. Creditors are, however, obligated to abide by the terms of the automatic stay granted to debtors, during which all collection, foreclosure, or repossession efforts must cease, although certain circumstances may qualify the creditor to receive a court order authorizing relief from that stay.

During periods of financial distress, a company may choose to sell a portion of its assets - or its entire business - in order to restructure or repay its debt. This can present a valuable opportunity to investors, who may acquire a distressed firm’s assets for a comparatively low price. In many cases, these buyers benefit from the legal protections of the bankruptcy process, as distressed asset sales frequently take place after a firm has filed for bankruptcy. However, companies and buyers may also choose to complete a transaction independent of the bankruptcy court process.

Although out-of-court distressed sales allow the parties to skip the bankruptcy auction process and speed up the transaction, they also present a number of unique considerations. If the selling company will dissolve following the liquidation of its assets, it may be unable to uphold asset warranties or representations, creating what is essentially an as-is sale. Additionally, out-of-court distressed sales often require the approval of a company’s lenders and shareholders.

Out-of-court distressed asset buyers must also take measures to prevent accusations of fraudulent conveyance, in which an insolvent company transfers its assets solely to keep them from creditors. In order to avoid such complications, a buyer should work with the selling company to build a record of the value of its assets, which may include obtaining professional financial opinions on asset valuations and the company’s insolvent status.

With more than 20 years of experience in bankruptcy and restructuring, California-based attorney Suzzanne Uhland of O’Melveny & Myers, LLP, represents former major solar power corporation Suntech Power Holdings Co., Ltd., as its restructuring moves forward under the provisions of Chapter 15. Suntech’s case has involved bankruptcy proceedings in both the Cayman Islands and New York, with Ms. Uhland and the OMM legal team successfully arguing that their client should be permitted to undergo restructuring under the provisions of Chapter 15 in New York while declaring the Caribbean location its chief overseas venue.

Suntech filed for Chapter 15 protection in 2014, hoping to halt a forced Chapter 7 dissolution. The company, registered in the Cayman Islands, noted in that filing that it was under obligation to at least 100 creditors and in possession of more than $1 billion in assets and financial liabilities.

Suntech was previously the parent company to a global network of manufacturers and distributors of photovoltaic cell technology applications for both commercial and residential market segments. In early 2013, the company failed to meet the obligations attached to more than $500 million it owed to bond holders. It sold off its chief subsidiary company toward the end of that year, just after four American bondholders initiated an involuntary petition for Chapter 7 with the court. The current Chapter 15 proceeding halted that initiative and now allows Suntech to seek viable long-term solutions to its financial crisis.

A partner in the San Francisco and Newport Beach law offices of O’Melveny & Myers, LLP, Suzzanne Uhland has more than 20 years of experience in Chapter 11 filings, insolvency, and corporate restructurings, and she has dealt extensively with technology, energy, real estate, and intellectual property cases.

Among Ms. Uhland’s most prominent cases is her current representation of Suntech Power Holdings Co., Ltd., as it undergoes a Chapter 15 restructuring process. Suntech, involved in bankruptcy hearings in the United States and in the Cayman Islands, was among the largest producers of photovoltaic cells and solar panels for residential, commercial, and utility company use. Before the onset of its financial troubles, Suntech had sold more than 25 million photovoltaic panels.

In 2014, the manufacturer filed for Chapter 15 protection in the U.S. Bankruptcy Court for the Southern District of New York, hoping to avoid a forced Chapter 7 liquidation request brought by a group of its bondholders. By that time, Suntech had already begun a process of negotiating with its creditors and conducting an analysis of its assets.

The O’Melveny & Myers team argued that a Chapter 15 filing in New York would best allow Suntech, incorporated in the Cayman Islands, to continue its restructuring. In a notable decision, the court agreed, finding that Suntech could claim the Cayman Islands as its main foreign proceeding while maintaining its ability to file for Chapter 15 in New York.